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Zero Based Budgeting applied to marketing & communication

ZBB means Zero-Based Budgeting. The idea behind this acronym is simple yet powerful: start from a blank page. This discipline originally used to increase the efficiency of physical assets is quickly gaining momentum in the areas of marketing and communication. Unilever is an example of a large-scale deployment of ZBB in these areas.

A change process, even simple and effective, can meet the resistance of existing ways of working. That’s exactly the case for ZBB applied to resource allocation in marketing and communications whose budget owners are notoriously organized in silos. And the challenge goes beyond marketing and communication since the universe of touchpoints affecting consumers’ choice includes the commercial side of things. Indeed, a typical, comprehensive list of touchpoints encompasses the following disciplines: media, digital, point of sale, promotion, CRM, sponsoring, events, PR, corporate / societal activities, etc.

By combining human nature, essentially on a defensive mode, and the budgeting exercise which is structured by discipline, companies most often end up with an incremental approach year on year. An increased budget always means more power whether inside or outside the organization.

The per discipline approach results in a long tail of service providers: that’s actually the rational response to this way of working. Unilever stated that, at the inception of the ZBB process, they realized they had a working relationship with nearly 3,000 agencies of all kinds.

The initial condition for a successful ZBB approach is a clear commitment of the top management behind it. Without this commitment, silos will eventually burry the process.

How to initiate the approach? It all starts with a workshop gathering the stakeholders of above-mentioned disciplines plus finance / controlling and top management whose role is key: only the top management (Managing Director or Head of BU, etc.) has the authority to call the shots. Indeed, a ZBB workshop should be at the same time a group exercise with a clear decision making at the end. Top management’s role is to ensure that decision making is not left behind.

What’s the purpose of the workshop? ZBB applied to marketing and communication consists in building an integrated communication plan, literally starting from a blank page. The workshop is essentially structured around 4 stages:

  1. Aligning on the brand’s communication platform and strategic objectives: when gathering many stakeholders, there might be different perspectives on the brand’s story. It’s actually essential to share a common story and make sure it is sharp enough to be the basis of an investment strategy.
  2. Choosing the 2 or 3 pivotal activities that have the responsibility to primarily convey that story to consumers. Like casting the 2 or 3 top acts in a movie, this selection is far from trivial: it’s a strategic and structuring choice. Many criteria should be used to make this selection: the adequacy to the brand story of course, but also the influence of the chosen touchpoints in the category where the brand competes, the balance between attitudinal and behavioral components, the capacity of the brand to be successfully deployed in these activities, etc.
  3. Choosing the supporting activities, those that should at the same time reinforce the pivotal touchpoints and cover all the components of the consumer journey. Supporting touchpoints could also be assigned to reach specific targets. In all cases, the key principle is that you need to clearly state the planned synergies between the supporting and pivotal touchpoints, not just add them on the map.
  4. Eliminating or redeploying the activities below the visibility threshold.

What you get is a real “less is more” plan with typically 30 to 50% less activities but much better funded. According to the top management’s goal, the exercise could be made with the same, lower or higher overall spend.

What are the benefits?

  • Managerial: the workshop ends with a blue print shared by all stakeholders in a record time. Now each discipline can execute to its best capabilities its part of the brand task but with a clear understanding of how it fits and contributes to the bigger picture.
  • Effectiveness and efficiency: the brand gains on both dimensions, provided the execution is up to the challenge. Never forget that a great plan is not worth much without a great execution.
  • Service providers: a ZBB approach usually leads to a small number of agencies whose role is clarified. This generates much more productive brand /agency relationships with a sharply reduced time devoted to screening out the constant stream of new initiatives proposed by a long list of service providers. One can think that these new initiatives are a source of creativity: in reality, they are often a source of thin spreading, with a large number of below threshold activities. You’re much better off concentrating your creativity on the touchpoints that have passed the cut of the ZBB approach.